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What is a Payday Loan?

We have talked about easy paydays, now let's talk about payday loans. If you need money in a hurry, this type of loan just might be for you. Payday loans have a number of benefits but also a number of negatives that you should be aware of. Always wanting to stay on the bright side, here are the positives first.

Payday Loan Positives

1. They fund quickly.
No other loan will fund as quickly as a payday loan. Once approved, you can have your money the very next day and it will be deposited directly into your bank account. This means no waiting for a check to clear, you can use it immediately to pay the expenses that you need to pay.
2. They are easy to get approved for.
Even if you have bad credit, you can get approved for a payday loan. Lenders are not using your credit score like traditional banks do. They are willing to approve those with lesser scores.
3. They have minimal requirements.
If you have a job and a checking account, you will probably be approved for a payday loan.
4. You can apply for them quickly.
Applications are short sweet and to the point. It takes just a few minutes to apply for one of these loans.

Payday Loan Negatives

1.They have high effective APR's.
I am talking APR's in the hundreds. The reason for this is because of they use fees and are for very short terms of under two weeks. This makes the effective APR very high.
2. They have short terms.
If you need longer than a few weeks to pay back a loan, you are out of luck. These loans, by their very name, are designed to be short term loans.
3. They are almost too easy to apply for.
They are simple to qualify for and your lender will not tell you if you can really afford it. You need to make the determination for yourself as to whether you should proceed with one of these loans.

There you have it, some food for thought on payday loans.


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